A NEW study has revealed Scotland boasts the most affordable housing in the UK, with mortgages at their easiest to pay for almost a decade.
Seven of the 10 most affordable areas in the whole of the UK are north of the Border, with East Ayrshire topping the table.
Research from the Bank of Scotland shows typical mortgage payments for first-time buyers and those moving home fell to 20% of disposable earnings in the fourth quarter of 2011, compared to the UK average of 27%.
This is the lowest level since 2002 and well below the average of 30% for the past 27 years.
Nitesh Patel, housing economist at Bank of Scotland, said: "The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market.
"Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 2002.
"The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England bank rate over the foreseeable future should maintain affordability at favourable levels in 2012.
"This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households."
Dr John Boyle, head of research for estate agents Rettie and Co, added that, while a boost in affordability is helpful for the market, a lot of barriers for potential buyers still remain.
He said: "Housing affordability in Scotland has been boosted by the modest fall in house prices, reduced mortgage rates and an increase in the size of deposits being put down by buyers.
"However, the high level of deposit required and restrictions on lending are making it difficult for people to get on the housing ladder, hence transaction levels remain relatively weak.
"The Scottish market was not as over-stretched in terms of affordability as it was in many other parts of the UK at the height of the market, which is one reason why the correction in terms of house prices was not as severe here.
"Improving affordability certainly provides a boost to the housing market, but there remains a lack of market confidence due to economic uncertainty."
The research shows, overall, there was a modest fall in mortgage payments compared to earnings over the past year. The figure was 21% in the fourth quarter of 2010.
East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.7% of average local earnings.
It is followed closely by West Dunbartonshire and North Ayrshire, both on 16.2%.
In Scotland, Edinburgh is the least affordable area, with average mortgage payments accounting for 26.2% of average local earnings.
It is followed by Aberdeenshire on 25.9% and Perth and Kinross on 25.6%.
Rettie and Co said thanks to the increased affordability, all of their properties brought to the market in mid-2011 in South Lanarkshire – the ninth most affordable area in Scotland – have now sold.
James Whitson, director of the estate agents, said: "The affordability of South Lanarkshire has been seized upon by the price-sensitive market."
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